Managerial Ability and Forecast Accuracy

Journal of Modern Accounting and Auditing, Forthcoming

Posted: 26 Dec 2017 Last revised: 4 Jan 2018

See all articles by Panagiotis I. Chronopoulos

Panagiotis I. Chronopoulos

Athens University of Economics and Business - Department of Accounting and Finance

Georgia Siougle

Athens University of Economics and Business - Department of Accounting and Finance

Date Written: December 20, 2017

Abstract

We examine the relation between managerial ability and management forecast accuracy. We find that forecast accuracy is positively associated with managerial ability in the case of sales forecasts. Specifically, more able managers are associated with lower magnitude’s forecast errors in the case of sales forecasts. Additional analysis finds that managerial ability is immaterial to EPS figures’ forecast accuracy; i.e. EPS forecasts appear not to be affected by manager’s superiority. Regarding sales forecasts, the results are consistent with the assertion that managers impact the quality of the delivered management forecasts. Regarding EPS forecasts, the results are in alignment with Demerjian et al. (2013) who highlight that managerial ability is an ability score related to the entire management team.

Keywords: Managerial Ability, Management Forecasts, Forecast Error

JEL Classification: G24, G28, M41

Suggested Citation

Chronopoulos, Panagiotis I. and Siougle, Georgia, Managerial Ability and Forecast Accuracy (December 20, 2017). Journal of Modern Accounting and Auditing, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3090996

Panagiotis I. Chronopoulos (Contact Author)

Athens University of Economics and Business - Department of Accounting and Finance ( email )

76 Patission Street
GR-104 34 Athens
Greece

Georgia Siougle

Athens University of Economics and Business - Department of Accounting and Finance ( email )

76 Patission Street
GR-104 34 Athens
Greece

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